Information For Buyers and Agents
As we approach spring and the busy real estate market, it seemed like an appropriate time to write something about waiving inspections in an attempt to help people understand the complexity of the market. Many realtors are suggesting pre-offer inspections, waiving inspections, waiving other contingencies, and unique strategies to win out in desperate situations. There are several problems with this, and I wanted to write an article to help address some of the larger issues.
First off, waiving a home inspection. There are numerous risks with waiving an inspection and any home inspector can tell you several horror stories that resulted from this decision. Some people are waiving inspections and never having any type of inspection which is the most obvious potential for risk. There could be various safety concerns (many of them easy to fix) that you are not aware of, and you may also find large issues during your ownership, which result in huge costs. In the best case scenario, nothing major happens when you own the property and there are still likely going to be surprised during the inspection when you go to sell.
Some people also initially waive the inspection and then get a post-sale inspection completed. After they are the formal owner, they have an inspector come through just so they can be aware of the issues. The advantage of this approach is hopefully you can improve the safety of the home prior to having your family move into the property and attempt to address some of the immediate concerns. The disadvantage is most people have a limited budget and there are many cases that clients have an inspection with many issues and choose not to move forward with the house. When you already own it, these inspections are very disheartening when you get bad news on the purchase that you just made. I find myself being relieved when these home inspections go well because I hate delivering the message when the house has serious issues, and it does happen a lot.
We discussed the different scenarios when someone decides to waive a home inspection, what about when they get a pre-offer inspection? This is when things get really complicated. My first question is simply “what is a pre-offer inspection?” Many people, including realtors, don’t even really know home inspectors have entirely different perspectives on this. This to me is creating big problems for buyers and their plans for purchasing a home. So, let’s spell out some of the variations out there about how different inspectors are handling a “pre-offer inspection”.
- Time: Some inspectors are completing “quicky” 30 minutes to an hour inspections for pre-offer inspections while others are completing entire inspections (3 hours, maybe more)
- Tools: Some inspectors are doing pre-offer inspections with nothing but a flashlight while others are using moisture meters, infrared cameras, and all of the equipment they would typically use
- Report Writing: While some inspectors produce a full report with all sorts of information, others are providing an abbreviated or even no written report.
- What’s Being Inspected: Some inspectors are eliminating categories of a home inspection and rather than looking at everything they may focus on systems that they deem as more important or complicated (foundation, electrical, plumbing, heating systems…etc.)
- Agreements: While a normal inspection may not change the agreement when written as a pre-offer inspection if you are going to drastically change your practice you often need the client to sign off on it. This has resulted in agreements for these inspections that may result in the client “signing away” on an inspection that was significantly less comprehensive.
- Insurance: If an inspector strays too far from their states standards of practice, this may be cause for a coverage denial. If an inspector misses something on an inspection that is not up to snuff the consumer and inspector may be in a bad position if the insurance company denies their claim.
Now that you can see how great things can vary based upon what the inspector is doing you can understand how the result can vary significantly. This begs the question “how can inspectors do things so differently”. Well, this is an excellent question and there are several aspects I have heard discussed about it. First off, I have heard several arguments that a “pre-offer” inspection is not a home inspection at all. I have heard the phrase “pursuant to the sale” being questioned as if the pre-offer inspection occurs before the client is interested in the sale. I have also heard inspectors state that “a pre-offer inspection is not to replace a home inspection, it’s to replace doing nothing before buying a home.” On the contrary, some inspectors have expressed that they will not do anything other than a home inspection because they feel that is the proper way to protect consumers.
If we start to evaluate which of these opinions is the best to follow, I think a good thing to start with is the definition of a home inspection according to Massachusetts 266 CMR. It states “Home Inspection. The process by which a Home Inspector observes and provides, pursuant to the sale and transfer of a residential building, a written evaluation of the following readily accessible components of a residential building: heating, cooling, plumbing and electrical systems, structural components, foundation, roof, masonry structure, exterior and interior components, and any other related residential housing components. A home inspection shall, at a minimum, conform with standards of practice promulgated by the Board.” * My feeling is, if you consider a pre-offer inspection to fall within this category, several things are evident. It’s clear 1. We should follow the standards of practice; 2. We should provide a written report; and 3. It outlines what we are expected to look at from a general standpoint. Every home inspector needs to make their own business decision and there is a lot more to consider than just this definition, but I think it points out the complexity of the situation.
The other consideration that is a little tricky to discuss is the Board of Registration of Home Inspectors in Massachusetts and its perspective. I have personally attended meetings as a guest and felt they made it clear that pre-offer inspections would be considered “home inspections” however at least in the conversations I was privy to, they took no formal statement and have also issued no formal bulletin that I have seen. They also may not issue any notice until a complaint comes in about one of these pre-offer inspections.
Ok, we took a deep dive into home inspections being waived, pre-offer inspections, and the complexity of these issues. I will spare you from too much of my opinion on this topic because I feel strongly about what is best for the consumer and have an obvious bias. So, what should a consumer take away from this article? I cannot offer any legal advice but would caution you to consider the risks of any decision you make. If you choose to waive an inspection, you are taking significant risks as noted above but I would certainly encourage anyone who has already waived their inspection to consider an inspection now. If you are considering the strategy of a pre-offer inspection, ask yourself these questions. If there is no report provided, how can I prove my inspector missed something? What is the agreement saying about my “pre-offer” inspection (am I signing something accepting waiving aspects of an inspection)? If my inspector is spending less time or using less tools, what are they not looking at and potentially missing? These questions can help you identify some of the risks you may be taking without otherwise knowing them.
Lastly, having been involved in so many transactions, I understand the situation many clients are in. There is a tremendous amount of pressure that happens in a quick period when purchasing a home. Realtors often tell clients to be prepared ahead of time for when the right property appears. I completely agree with this idea but think you should prepare a lot more than just having financing preapprovals and the traditional steps. Talk to a home inspector prior to putting in any offers. You should select your home inspector as early as possible, ask him what type of advance timing he needs for scheduling and discuss types of inspection options with him. This puts you at a huge advantage because these decisions are much more difficult when emotions and stress are involved with a particular property. Decide what you’re willing to waive ahead of time and stick to it. Too many times I see clients who say, “I would never waive an inspection” and then shortly after they are considering it. There are sometimes second rounds of offers and high-stress situations where clients feel obligated to make desperate decisions. I would mentally commit to whatever risk you’re comfortable with and then stick to it. Realtors and Home Inspectors alike want you to make your own decisions, but we also want you to do so knowing all the facts. Research in advance is the best option and if this article can get you thinking about these things, it accomplished its goal!